Japan and the US have reached a trade deal under which Japan will pay 15pc of reciprocal tariffs to the US instead of the previously announced 25pc.
"We have reached an agreement with US president Trump in the Japan-US talks on US tariffs," Japan's prime minister Shigeru Ishiba said on 23 July. The reciprocal tariff Japan has to pay was set at 15pc — the smallest amount that has ever been set against a country which has a trade surplus with the US, Ishiba said.
Under the deal, Japan's exports of automobile and auto parts to the US will also attract a tariff of 15pc, down from the 25pc additional tariffs that were effective since April. "Ahead of other countries, Japan has succeeded in achieving lower tariffs on automobile and auto parts," the prime minister said.
His remarks came after President Donald Trump announced the deal earlier in the day in a social media post. "We just completed a massive deal with Japan, perhaps the largest deal ever made," Trump wrote.
The deal includes Japan's potential investment of $550bn in the US. "We have agreed to build strong supply chains in sectors of importance for economic security, through the investments in the US by Japanese companies," Ishiba said. Tokyo is considering providing loans and guarantees from agencies, including state-owned Japan Bank for International Co-operation (JBIC), to finance the investment.
Japan focused on investing in the US to avoid high tariffs. "We have been saying ‘investment rather than tariffs,' and by investment we will create jobs in the US," Ishiba said in late May after a phone call with Trump.
Under the agreement, Japan will open the "country to trade including cars and trucks, rice and certain other agricultural products," Trump wrote in his post.
The US president in early July had sent an official letter to the Japanese government announcing plans to impose additional 25pc tariffs on all imports from Japan starting 1 August, slightly up from the initial rate of 24pc set in April.
